(This article appeared previously on Grandparents.com)
Americans donate upwards of $300 billion to charities each year, from reputable national organizations like the American Red Cross to crowdfunding websites like GoFundMe. While the vast majority of those philanthropies are legitimate aid efforts, there’s always a danger of fraud, especially for people who may not be savvy about modern ways to donate.
“Make sure you’re channeling it into charities that can really make a difference,” says Stephanie Kalivas, an analyst at CharityWatch. “There are a lot of bad people who take advantage of people’s generosity.”
With that in mind, here are 11 simple DO’s and DONT’s for giving this year.
DON’T give to cold callers
You’re sitting down to dinner when a seemingly nice young man calls, asking you for $50 to help kids with cancer. Don’t do it. “In general, we tell people not to give over the phone,” says Sandra Miniutti, vice president of marketing at Charity Navigator. “Generally speaking, those calls are being done by a for-profit telemarketer that’s contracted with the charity, and typically they negotiate contracts that are not favorable to the charities.”
Just because you receive a trinket or gift of some sort, does not make you have to give to that charity. You can say no.
— Sandra Miniutti, Charity Navigator
Up to 95 cents of every donated dollar can go to the telemarketers, leaving precious little for those they claim to help.
“We recommend politely hanging up the phone,” says Miniutti, and don’t give the caller any personal data — especially your Social Security number or credit card information.
Never, ever send cash. “If you’re passionate about the cause, look around for something you want to support,” says Miniutti. Find a reputable charity’s website, and give directly through a phone call you place or an online donation.
DO secure your personal information
And if it does? “You should be able to opt out,” she says. “Call or go online and ask, ‘Please remove my name from the list.'”
Sometimes, even trusted charities can be a little loose with your data. If that’s the case, “Write to them and say, ‘I’m only going to keep giving if you solicit to me once a year,'” says Kalivas. “Charities should be understanding and respect the privacy of their donors.”
DON’T fall for sound-alikes
“Sound-alike names are both intentional and accidental because there are one million public charities,” says Miniutti. “The scammers will play on that — they’ve tweaked it just a little bit so you think you’re donating to a good charity.”
In other words, you may think you’re giving to Make-a-Wish Foundation, when really you’re donating to Kids Wish Network, Children’s Wish Foundation International, or Wishing Well Foundation USA, all three of which land high on The Tampa Bay Times’ authoritative list of America’s Worst Charities.
On the upside, while the government can’t bust everyone, it is catching on. Earlier this year, the Federal Trade Commission (FTC) brought charges against four sound-alike cancer groups that conned philanthropists out of a collective $187 million — good news for people seeking payback, but bad news for people seeking their pay back.
DO follow the money
Once you’ve found a charity you like, explore its financial picture. “You want to look at the charity’s Form 990 — the informational tax return that they submit to the IRS. By law, they have to give it to you if you ask,” says Miniutti. “If they’re hesitant to give it to you for any reason, that’s a red flag. They have to provide you the last three filings, if you ask.”
Once you’ve found the 990, look at exactly how the charity uses donated funds. “First, know the programs being run,” says Kalivas. “How is your money being used specifically? It funds research? It funds education? It goes directly to people in need? Second, you want the money to be going to the charity, as opposed to fundraising or administration. It’s reasonable to spend 60 percent or more on programs. Our top-rated programs spend 75 percent or more.”
One exception: Churches (including Salvation Army), synagogues, and other houses of worship don’t have to file 990s. “MinistryWatch.com does rate churches and big religious groups,” says Miniutti, but there are few recognized resources beyond that.
DON’T cave in to jerks or sob stories
Charities depend on making emotional connections to raise funds. However, a legitimate group — one that knows what they’re doing — won’t coerce you to donate with high-pressure sales tactics or outsized tales of woe. Granted, those appeals can be tough to take.
Says Miniutti: “Somebody calling at dinner time to help sick kids, help our heroes, or fight cancer — who doesn’t want to help these people?”
Remember, though: Unscrupulous solicitors rely on that sympathy to make their pitch. Never, ever donate right away, especially during a phone call solicitation, and if you are interested in the essential cause, ask the caller to mail you information for perusal later.
DO be wary of solicitations after a catastrophe
Americans are seldom more generous than after a natural disaster, terrorist attack, or devastating accident. Unfortunately, scammers exploit that kindness. “The FBI found 4,000 websites all with variations on the name ‘Hurricane Katrina’ even before it made landfall, and many were run by criminals overseas,” says Miniutti. “We saw the same thing after 9/11. A lot of those charities went belly up.”
“In times of disaster, we recommend not going with a small charity or new group,” she says. The group may not have bad intentions, but the odds of it having the resources and infrastructure to support a large-scale relief effort aren’t great.
Instead, “We recommend going with charities that have experience in the region.” Charity Navigator will always have a list of suggested organizations, like this one for the Syrian refugee crisis.
DON’T give just because the charity sent you a gift
I don’t know about you, but I have a drawer at home filled with return address stickers from charities I’ve never sent a dime to — and it makes me feel guilty that I haven’t donated. Happily, Miniutti lets us off the hook: “Just because you receive a trinket or gift of some sort, does not make you have to give to that charity. You can say no.”
“Keep in mind, these gifts increase fundraising expenses,” adds Kalivas, who encourages you to ask yourself: “Do you want your money going towards programs or these fundraising gifts?”
DO look at the charity’s Facebook page
Whether you’re giving to a major charity or to an individual raising money for a cause through crowdfunding websites like GoFundMe and YouCaring, it helps to check out a group’s Facebook page. Not only does it flesh out the charity, but it gives you a glimpse of others supporting the cause. “Just keep in mind that the Facebook page is being manned by the charity itself,” cautions Kalivas. “It’s probably promotional,” meaning the negatives won’t necessarily be on display.
“I think social media’s a great way to become inspired about giving,” says Miniutti, who advocates returning to the primary source to make your donation. “Be careful about clicking anything and giving personal information. I would recommend going back to the website.”
DON’T mix up “tax deductible” and “tax exempt”
One perk of holiday giving is a nice little deduction on your tax return. Alas, confusion about terminology means some generous people miss out. “‘Tax exempt’ and ‘tax deductible’ aren’t the same thing,” says Kalivas. “Any nonprofit is going to be tax-exempt, but that doesn’t mean you’re going to be able to write that off.”
For example, Feed the Children is a tax exempt group and your donation to them is deductible, because they’ve filed as a 501(c)(3) organization with the IRS. On the other hand, political action committees (PACs) are tax exempt, but your donation to them is not deductible, because political donations overall are not tax deductible.
Still confused? Here’s the easiest thing to do: Head over to the IRS Exempt Organizations Select Check and search for your chosen charity. You’ll have your answer in seconds.
DO carefully consider gifts in kind
Gifts in kind, or in-kind donations, are material goods — clothes, food, furniture — that go to those most in need. They’re a fantastic way to get rid of stuff in good condition, while still helping someone else.
“In-kind donations are great,” says Miniutti. “The important thing to remember is to contact the charity first and make sure it’s something they can use. Charities have to spend a lot of money to throw stuff out, because they can’t make good use of it.”
Of course, there are scams with in-kind donations, too, and Kalivas mentions two to watch for:
“Be careful with just going to just any thrift store, because some are run by for-profit companies.”
“A lot of areas have [clothing] bins on the side of the street, and people should be careful of those bins, because many are being run for for-profit services. The bins should clearly say how the clothing donations are being used, and should say if it’s being used by a for-profit or not.”
DON’T skip review sites
Hands down, checking with a third-party evaluator is among the best ways to check out a charity. Many use rating systems — stars for Charity Navigator, a letter grade for CharityWatch — to convey the effectiveness of a group at accomplishing goals and using money wisely.
Need some guidance on avoiding charity scams? The FTC recommends using the following sites:
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